Russia's Gazprom tells OMV it will halt gas supplies to Austria from Saturday

Russian state-owned company Gazprom will stop supplying natural gas to Austria from Saturday morning. Gazprom informed Austrian company OMV, which buys the gas, today. Gazprom's move is a response to OMV suspending payments to the company in order to recover an amount awarded to it in arbitration.

OMV said on the Central European Gas Hub platform that Gazprom had informed it that supplies would be reduced to zero from 06:00 CET on Saturday. According to Reuters, this could mark the end of the last Russian gas supplies to the European Union.

According to Austrian Chancellor Karl Nehammer, Austria's gas storage facilities are 93 percent full, leaving the country well prepared for a halt to supplies from Russia.

„So something we have long expected has happened, ever since the start of the war in Ukraine, and we have been preparing for this situation,“ Nehammer said at a press conference today. He stressed that no household in the country would be left in the cold. „No one will blackmail us.

Not even the Russian president,“ the chancellor said. „We will not let Putin's government, or Putin himself, bring us to our knees,“ APA quoted him as saying.

OMV warned on Thursday that Russian gas supplies through Ukraine could be halted before the end of the year as a result of the arbitration proceedings against Gazprom. The company said it had been preparing for a possible halt to supplies from Russia for some time. It has secured transport capacity from Germany and Italy, as well as long-term contracts with other gas suppliers. It can also supply liquefied natural gas (LNG) from the Netherlands.

A court awarded OMV 230 million euros (CZK 5.8 billion) in compensation. The Austrian company sought damages for irregular gas supplies and the complete suspension of supplies to Germany in August 2022. OMV is also involved in several other disputes with the Russian state-owned company.

„From tomorrow (Saturday – CTK note), only two EU countries will continue to import significant volumes of Russian gas by pipeline: Slovakia and Hungary. Some EU countries do import Russian liquefied gas delivered by sea,“ Trinity Bank chief economist Lukáš Kovanda told CTK.

These are primarily France, Belgium and Spain. „If oil imports are also included, France is the EU's largest importer of Russian fossil fuels,“ Kovanda added. Austria ranks second after France, having imported Russian fossil fuels worth the equivalent of CZK 5.6 billion, he said. So far, 7,400 megawatt-hours per hour have flowed from Russia to Austria through Ukraine, equivalent to around five terawatt-hours per month.

The price of natural gas on the European market for delivery in December was down by around one percent this evening, trading slightly below 46 euros (CZK 1,162) per megawatt-hour (MWh). It had earlier climbed as high as 47.35 euros. Two years ago, a megawatt-hour was trading for more than 90 euros.

Austria is one of the few European countries still dependent on Russian gas, while most of Europe has reduced imports since Russia launched its military invasion of Ukraine in February 2022. The agreement on the transit of Russian gas to the EU through Ukraine is expected to expire at the end of the year, as Ukraine is not interested in extending it.